The Growing Importance of Sustainability in the Business World
Sustainability as a priority in business
Making a business sustainable has a positive impact on more than just the environment now and it is recognised as a key part of growth for any company. Investors are more likely to be interested as they will use environmental, social and governance metrics to determine the impact of a business. Investors will most likely support a brand with a lower carbon footprint and evidence of a sustainability strategy. Investors notice the benefit that comes with a sustainable business for customer satisfaction and longevity for the company. Customers expect businesses to meet their sustainability expectations as reported in a recent Forbes article, 90% of customers are willing to pay an extra 10% on sustainable products leading to financial gain for the brand.
The public are quickly becoming conscious consumers with thought going into which companies they support and where they give their loyalty. The public’s climate anxiety has a huge role in the consumers’ decisions. Brands could be boycotted or supported depending on where they place their priorities in regard to sustainability.
Clearly, Sustainability has a big impact on brand reputation, as Forbes has recorded that 58% of US consumers prefer to use services or purchase goods from a sustainable source. It is a growing population of people who place value on the sustainability of a business.
Sustainable options for a business
- First of all, measuring your carbon footprint is the best way to manage it. This helps you to know where and how to move forward.
- Using renewable energy sources to power production lines such as solar or hydropower. Using these energy sources, significantly reduces the greenhouse gasses and air pollution that will be emitted.
- Implementing a greener commuting scheme for staff can cut down on the amount of cars driven to work. The cycle-to-work scheme is a popular choice for UK employers and focuses on a healthy and eco-friendly journey to work.
- A simple but impactful way to become more sustainable is to make sure the business utilises recycling bins and discards waste correctly. This includes the office spaces and the production line.
- Sustainability not only includes the impact on the environment but also the welfare of the staff within the company. Staff wages has been a global concern, causing loss of support if the workers are not paid a fair salary. People are progressively becoming aware of the staff behind the products and the level of welfare they receive from employers. The workers are a business’s most valuable resource and their welfare needs being met leads to higher productivity and retention.
The response from CEO’s
CEOs are taking responsibility for these sustainable goals being reached, with ESG Today recording 72% feeling accountable for their performance. This compared to only 19% in 2013 shows the increase of importance that is placed on sustainability within the last decade. CEO’s are also experiencing climate anxiety and coming up with solutions to reduce the impact their business has on the environment.
CEOs are starting to view sustainability as an investment to aid their business.
Benefits for the Business
There are various advantages to striving for a sustainable future within business, including saving money. A reported 33% of businesses have an active strategy to improve, manage to drive down their costs and can therefore boost profits by up to 60%.
Surprisingly sticking to environmentally friendly practices can reduce the cost for a business in the long run. The expense of transitioning to energy-efficient lighting, better insulation and eco-friendly packaging can quickly become cost effective once properly implemented. Using traditional packaging costs between 4 – 10% of a business’s annual turnover is spent on waste management, causing sustainable alternatives to be a viable option and a cost-effective one too.
The obstacles in the way of reaching Sustainability goals
Business leaders are becoming increasingly worried about the risk of progress being halted by external factors. The economic climate is creating a challenge to CEOs and their goals as the public cut back on spending, and resources become more expensive. The geopolitical risks are also limiting the progress that can be made with trade becoming increasingly difficult.
Brands face various challenges when reaching for sustainability, including scientific drawbacks and the quality of their products.
The Danish toy company LEGO attempted to make a big stride in terms of sustainability which had its own challenges. The colourful bricks that LEGO is so well-known for have been made with oil-based plastics since 1946, creating the strong material used to hold everyone’s creations. LEGO produces roughly 100,000 tonnes of plastic each year which becomes 110 billion bricks, according to Cambridge Networks. The company realised the damage the plastic was causing as the material cannot be broken down. One of their aims was to replace the oil-based polythene, which is used in certain products with a plant-based alternative which was successful. They have also almost eliminated the use of single plastic bags and packaging.
LEGO put in research and money to find a new way to create the bricks that could be less harmful to the environment. Despite their best efforts, the company had to abandon efforts as using recycled plastic bottles would have given off a higher carbon footprint over time. The bricks have the biggest impact on the environment but LEGO announced that the material was not strong enough and so more ingredients would have been needed. Likewise, the energy required for the processing and drying time was not sustainable which did not match their goals. They continue to strive in their strategy to create eco-friendly products and deliver the same quality for their customers.
Many brands are focusing on small ways to show they care about the environment such as the paper straw becoming a global movement by 2011 and then being banned in the UK in 2020. Starbucks’ usage of paper cups adds up to four billion a year and the company add a coating of liquid retaining lining made of plastic meaning in many US cities, they are not accepted for recycling.
The pressure to become a sustainable business is increasing from the consumer and regulations. There is no choice but to make this a priority for the benefit of the company’s reputation and profit.